WASHINGTON (AFP) — Congressional leaders said Thursday they have reached agreement with Citigroup on legislation to provide relief to cash-strapped homeowners at risk of losing their homes.
Lawmakers want to include the legislation, which would allow bankruptcy judges to alter home loans to prevent foreclosures, in US president-elect Barack Obama's economic stimulus plan, estimated to cost upward of 775 billion dollars.
"This is a breakthrough," said Democratic Senator Christopher Dodd, adding that a recent dramatic rise in home mortage foreclosures is at the heart of the loss of consumer confidence and a major factor in the recent economic collapse.
"Foreclosure is the cause of our economic problems and we have got to address that," said Dodd, chairman of the Senate Banking Committee.
The Senate's number two, Dick Durbin, also hailed the agreement, and said he hoped other banks and mortgage lenders would follow.
"Citigroup's decision to support this proposal brings us closer to helping millions of homeowners save their homes and putting our flagging economy back on track," the veteran Democratic lawmaker said in a statement. Durbin proposed a similar measure in 2007 without success.
"I hope other institutions will follow Citigroup."
The proposal is targeted for families at risk but does not address foreclosures that have already taken place, lawmakers indicated.
With some 8.1 million American homes at risk of foreclosure, lawmakers said that a bailout for homeowners is an essential part of any economic rescue plan.
On Thursday, Obama called for "a sweeping effort to address the foreclosure crisis so that we can keep responsible families in their homes."
He also appealed to Congress to pass his stimulus package, saying that without action, "a bad situation could become dramatically worse."
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